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Asian currencies steady, tax concerns keep US dollar under pressure

The Thai baht remains firm for a third straight session having made a significant gain yesterday. — File pic

SINGAPORE, Oct 11 — Emerging Asian currencies were mostly steady against the US dollar today, remaining broadly supported as concerns President Donald Trump’s tax overhaul plan could stall kept pressure on the greenback against its major counterparts.

In China, the yuan see-sawed against the greenback, despite the country’s central bank fixing the midpoint at its highest level in three weeks, amid cautious trade in the currency ahead of key national leadership meeting next week.

Elsewhere in Asia, the Thai baht and the Taiwan dollar strengthened 0.2 per cent and 0.5 per cent against the dollar respectively.

Financial markets in Taiwan resumed operations after a long weekend today, with Taiwan stocks ending the session 1 per cent higher.

The Singapore dollar and the Indonesian rupiah posted very minor gains, while the Korean won and peso fell.

The peso was the only decliner in the previous session after weaker than expected trade data from Philippines.

“The trade deficit data released yesterday did not narrow to US$1.58 billion (RM6.68 billion) in August from US$1.62 billion in the previous as expected by consensus. Instead, it widened to US$2.41 billion in August,” DBS Bank said in a note.

In China, traders said authorities are keen to stabilise the yuan with only one week to go until the National Congress of the Communist Party of China.

The spot yuan was 0.02 per cent firmer at 6.5806 at 0621 GMT, after the People’s Bank of China set the official yuan midpoint at 6.5841, its biggest one-day strengthening since early June.

The currency firmed 0.65 per cent against the dollar in the previous session.

“This morning dollar-yuan fix came in higher than street estimates of the fix, despite the sharp move lower in dollar-offshore yuan and US dollar softness,” said Christopher Wong, an FX strategist with Malayan Banking Berhad.

“That could imply that policymakers may not be comfortable with the sharp one way move yesterday as stability remains key ahead of the 7th Plenary session and the 19th National Congress.”

China’s Communist Party opened a meeting today to make final preparations for a key party congress later this month.

The baht was firm for a third straight session today, having recorded its biggest percentage gain since the end of July in the previous session.

The currency got a fillip yesterday after Prime Minister Prayuth Chan-ocha, head of the ruling junta, said Thailand will hold a general election in November 2018, the most precise date he has given yet for the vote since taking power in a 2014 military coup.

Thai shares finished near 24-year closing highs as a result, hovering around the same level today. — Reuters